The latest victim of emotionally charged hyperbole and attacks has to be payday loans. It's funny how we still believe such allegations in a country who teaches kids about propaganda in public schools. We tell ourselves we would never have fallen for such propaganda, yet how many people still believe ridiculous accusations.
The Bowling Green Daily News is the latest media outlet to slam down on payday loans in an unfair way. Now if you don't believe me, I'm going to prove my point with direct quotes from their article which calls for even more restrictions on payday lenders:
"Payday lenders hurt a lot of people who are trying to get out of a financial emergency..." Incorrect. Payday lenders aren't hurting a single soul to be exact. Law requires them to fully disclose all terms and conditions of the loan. Anyone and everyone who has ever gone to a payday lender was made fully aware of what they were getting.
People can hurt themselves in a variety of ways besides just payday loans. How many foolish investments have cost people millions? Should we be banned from making investments then? I'd also point out that infinitely more people are helped by getting payday loans than are hurt by getting them.
"...these places offer short-term solutions to people with deep financial problems who often end up in a worse financial positions than before..." Incorrect. People with "deep financial problems" are typically in that position because they no longer have a job or are in mountains of debt and on the verge of bankruptcy.
Payday lenders offer short-term solutions to people with any kind of financial standing. In Utah, the median income of a borrower is $35,000. That's right around the national average. Then there's the word "often" which is simply not true. Default rates of first time borrowers are around 35% and repeat borrowes is typically 15% or less. So often people pay the loan back right on time.
"Lewis and countless others can become deeper in debt after borrowing..." After citing an anecdote that is not the norm, they include "countless" others who get thrown into debt because of a payday loan. In reality, we could count the few people who spiral into more and more debt with a payday loan. The fact is it is rare.
"Fees can eventually total considerably more than the original loan." True. If you borrow a loan that you are supposed to pay back in ten days and never pay it back, the fees can mount to anything! Does the author not realize that on a home mortgage, if you have 6% APR for a 30 year mortgage, you will end up paying more in interest than you received from the loan?
"Payday lenders exploit those making low incomes and trap them in a cycle of debt." Exploit and trap are great words. It's too bad they have nothing to do with payday lending.
To exploit is to take advantage of, and to trap is to capture by surprise or deception. Payday loans are available to all, not those with low incomes. No one takes advantage of anyone, they offer loans to whoever qualifies, regardless of income.
No one is trapped as the terms of the loan are fully disclosed, as the law requires, before any loan is given. Few get into a cycle of debt anyway, it simply is a made up problem. For every person who abuses payday loans and borrows irresponsibly, there are at least 100 more who borrow responsibly and pay back their loans on time.
Don't fall for the hyperbole and propaganda being thrown around by these supposed "consumer advocates" who advocate nothing but big government running our lives. America is the land of the free last time I checked. If the law allows us the freedom to drink, smoke and drive vehicles, all of which can cause harm, then allow us the freedom to use the financial products we choose. Leave payday loans alone.